STOCKS UP. Risk-off sentiment amidst recession concerns in the US lifted the Philippine main equities index on Friday (June 24, 2020). However, the peso continues to slide to more than a 16-year low against the US dollar. (PNA graphics) 

MANILA – The local bourse generally recovered, with the main index finishing the week up, but the peso sustained its weakness and almost touched the 45-level against the US dollar.

After days of finishing the trade in the red, the Philippine Stock Exchange index (PSEi) jumped by 2.51 percent, or 152.33 points, to 6,217.56 points.

All Shares followed with an increase of 1.61 percent, or 52.90 points, to 3,337.63 points.

Most of the sectoral indices also gained during the day namely Property, 3.81 percent; Holding Firms, 3.34 percent; Financials, 2 percent; Services, 1.23 percent; and Industrial, 0.47 percent.

Only the Mining and Oil index shed during the day after it fell 0.75 percent.

Volume was thin at 604.006 million shares amounting to PHP4.53 billion.

Advancers led decliners at 112 to 62 while 47 shares were unchanged.

“Philippine stocks rallied to close the week stronger, buoyed by slipping yields as the street continued to assess recession possibilities,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.

He said investors will be on the lookout for the latest economic data vis-à-vis the recession concerns.

Among the reports that will drive sentiments include the new homes sales and the final University of Michigan consumer sentiment that will be released later in the day.

“The latter could be particularly important for investors, as Fed (Federal Reserve) Chair Jerome Powell said that a surprise drop in the preliminary reading was one of the reasons the central bank hiked its benchmark interest rate by 75bps earlier this month,” he said.

On the other hand, the peso depreciated further to 54.985 against the greenback from its 54.7 close a day ago.

It opened the trade at 54.65, a big drop from its 54.4 start in the previous session.

It traded between 54.999 and 54.6, bringing the day’s average to 54.839.

Volume reached USD1.4 billion, higher than day-ago’s USD1.06 billion.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, in a report, said the peso remains on the slide to its more than 16-year low and closed to its weakest since October 27, 2005 when it finished the trade at 55.08.

He partly traced this to the second 25 basis point increase for the year in the Bangko Sentral ng Pilipinas’ (BSP) key rates on Thursday, which monetary authorities said is aimed at addressing the elevated inflation rate and is part of the withdrawal of pandemic-related measures.

He said indication for additional rate hikes both by the BSP and the Fed “increased the attractiveness/allure of the US currency vs. other major global/Asian currencies with higher short-term US interest rate returns, thereby leading to a stronger US dollar story vs. major global/Asian/ASEAN currencies in recent weeks/months.”

He forecasts the peso’s next resistance level at 55.00 against the US dollar. (PNA)